Duty relief improves India’s price competitiveness in the American market, offers recovery hope for labour-intensive sectors, and triggers a rally in export-focused stocks
The India–US trade agreement that lowers tariffs on several Indian products is expected to significantly boost export competitiveness and strengthen trade ties between the two countries. The deal brings down duties on key labour-intensive and export-driven sectors such as textiles, leather footwear, seafood, and gems and jewellery — industries that have been under pricing pressure in the American market in recent years.
Under the revised arrangement, Indian goods will now face an 18 per cent tariff above the most-favoured-nation or product-specific rate. This reduction is seen as restoring part of India’s lost pricing edge in the US, particularly when compared with competing exporting nations.
At this tariff level, Indian garments will attract slightly lower duties than apparel from Bangladesh and Sri Lanka, which continue to face 20 per cent levies. Indian carpets, which had earlier lost market share, are also expected to regain ground against Turkish suppliers. Seafood exporters stand to benefit as shrimp shipments become more affordable in American retail markets.
“Indian textile and apparel exporters have welcomed the India–US trade deal, saying the cut in US tariffs to around 18 per cent gives India a 2 per cent edge over competing sourcing nations. Industry leaders expect immediate margin relief in Q4 2025–26, stronger US orders from the next financial year, and a broader export growth cycle as buyers reassess global sourcing strategies,” said Fibre2Fashion on LinkedIn post.
Gems And Jewellery Sector Set For Relief
The gems and jewellery industry, one of India’s largest employment generators in exports, is also poised for a recovery. The US accounts for about 30 per cent of India’s gems and jewellery exports, but shipments have declined sharply over the past year due to tariff uncertainty and subdued discretionary demand.
Exports to the US fell 44.4 per cent year-on-year to USD 3.86 billion during April–December 2025, compared with USD 6.95 billion in the same period a year earlier. In December alone, shipments plunged more than 50 per cent, reflecting the combined effect of higher duties and weaker consumer spending. The tariff rollback is expected to provide immediate breathing room to exporters and gradually support a revival in orders.
Indian exporters may also gain a relative advantage over China, where tariffs on several product categories remain elevated at 34 per cent. However, some sector-specific duties, including those on auto components and certain metal products, will continue to apply.
Despite the optimism, businesses are seeking clarity on the finer details of the agreement, as no official document have been released yet.
The deal comes alongside India’s recent trade agreements with the UK and the European Union, which could help exporters diversify markets and reduce exposure to sudden policy shifts in any single geography.
Trade data underscores the importance of the US as a destination market. India’s exports to the US rose 11.3 per cent to USD 59 billion between April and November, driven in part by a doubling of smartphone shipments to USD 16.7 billion. Front-loading of exports ahead of the August tariff deadline also supported the increase. Additionally, nearly 40 per cent of India’s exports, including electronics and pharmaceuticals, were not impacted by the tariff measures.
Leaders Hail Pact As Strategic Milestone
“A big day for India-US relations as the trade deal has been locked with a significantly reduced tariff of 18 per cent, paving the way for stronger trade ties and mutual growth… This historic deal will elevate our strategic partnership and greatly benefit both nations and their people. Business between India and US set to flourish further,” Union Home Minister Amit Shah posted on X.
Commerce and industries minister Piyush Goyal said the deal “unlocks the power of two large democracies working together for shared prosperity of their people. Both India and US are natural allies and our partnership will co-create technologies, co-develop solutions, and work together for peace, growth, and a brighter future for India and the US”.
“US and India have complementary strengths. Both countries can co-create technologies and co-develop solutions that will benefit the world. Trade deal between US and India will lead to brighter future for both countries. India-US trade deal is a win-win deal. Citizens and industries of both countries will benefit greatly from this deal,” IT and I&B minister Ashwini Vaishnaw said.
Corporate leaders also welcomed the agreement. Aditya Birla Group chairman Kumar Mangalam Birla said: “The Aditya Birla Group is the largest Indian investor in the US, and we see this agreement helping shape more resilient supply chains, unlocking manufacturing opportunities and driving long-term economic competitiveness in both the US and India.”
Export-Linked Stocks Rally On Optimism
Equity markets reflected the improved outlook for export-oriented sectors. Seafood companies led the gains, with Avanti Feeds surging 20 per cent, supported by its strong North American exposure, which accounted for 65.4 per cent of total sales in Q1 FY25. Apex Frozen Foods jumped 17 per cent, with the US contributing 53 per cent of its export revenue in FY25, while Mukka Protein rose 4.6 per cent in early trade.
Textile counters also saw strong buying interest. Gokaldas Exports climbed 20 per cent to Rs 694.05, KPR Mill hit its 20 per cent upper circuit at Rs 1,030.80, Indo Count Industries rose 20 per cent, and Arvind gained over 19 per cent, as investors anticipated stronger demand from the US market.
